Background¹

India is the largest borrower from IFAD, both in terms of number of projects financed and resources invested. The Fund has provided loans for 24 agriculture and rural development projects at highly concessional terms since 1979. The total cost of the project portfolio is US$1.9 billion, including US$656 million in loans from IFAD and US$877 million in counterpart funds from the Government. Currently, 9 out of the 24 projects are under implementation. A large majority of loan-funded projects aimed to promote tribal development, women's empowerment and development, and establish sustainable rural financial services. IFAD has also provided grant funding for capacity building, electronic networking among projects to enhance communication and knowledge sharing, agriculture research and other areas. At the same time, India is the largest contributor to IFAD from developing countries, and therefore all this makes for a special relationship between India and IFAD.

The Office of Evaluation (IOE) undertook a country programme evaluation (CPE) in India in 2009. This was the first CPE done by IFAD in India since the Fund started its operations in 1978. The main objective of the CPE was to assess the performance and impact of IFAD operations, and to generate building blocks that would serve as inputs for the preparation of the new India country strategic opportunities programme (COSOP), which will be prepared by the Fund's Asia and Pacific Division and the Government of India following the completion of the CPE.

This Agreement at Completion Point (ACP) contains a summary of the main findings and recommendations from the CPE. It benefits from the main points emerging from the CPE national roundtable workshop held in New Delhi on 7-8 December 2009. As per the decision of the Executive Board, the ACP will be attached as an Annex to the new India COSOP, which is expected to be presented for Board consideration during 2010.

The ACP has been reached between the IFAD Management (represented by the Programme Management Department) and the Government of India (represented by the Department of Economic Affairs, Ministry of Finance), and reflects their understanding of the main findings from the CPE (see Section B below) as well as their commitment to adopt and implement the recommendations contained in section C of the ACP within specified timeframes.

Main evaluation findings

The CPE affirms the value of IFAD's contribution to addressing rural poverty in India. The Fund has particularly contributed to promoting pro-poor innovations, and served as a ‘ demonstrator' of how to methodically design, implement, supervise, monitor and evaluate pro-poor agriculture and rural development projects. These two characteristics make IFAD different from other donor organisations operating in India, and can serve to generate lessons and good practices that can be replicated and scaled up by Government and other partners to achieve wider developmental impact on rural poverty.

The projects funded by IFAD have achieved satisfactory results, especially in terms of livelihoods promotion amongst tribal people, women's development, and the promotion of rural finance systems. In particular, women are more empowered and have generally a greater voice in decision making and resource allocation of development projects and programmes. Efforts to promote tribal development have been good, for example in terms of promoting greater access to natural resources, including land and non-timber forest products which are central to their livelihoods. There is evidence that some of the IFAD-funded projects contributed to peace-building and reducing conflict (e.g., Andhra Pradesh and the North East). However, given the vast numbers of tribal people (more than 80 million) in the country and their very low economic and social status, the agenda remains incomplete and more efforts and resources are required to ensure their full integration into the economy, while at the same time preserving their cultural heritage. IFAD-funded operations have contributed significantly to developing new and successful models for the provision of micro-finance to the rural poor, and for linking them and their organisations to commercial banks. There are however areas in which micro-finance activities can be further developed to ensure an even wider impact on poverty, for example, by supporting microfinance institutions to build rural money transfer systems and networks for effectively and efficiently channelling remittances to and within rural areas. The CPE also found evidence of policy impact, for example, in terms of ensuring secure land titles for tribal people and inclusion of NGOs in development activities.

In general, the overall IFAD loan-funded project portfolio achievement in India is satisfactory, and better than the results of IFAD-funded projects in all regions - as reported in the 2008 Annual Report on Results and Impact of IFAD Operations. Performance has been particularly good in terms of relevance of operations and in the impact domains of natural resources management and environment, followed by household income and assets, food security and agricultural productivity, institutions and policies, as well as innovations, replication and upscaling. The area of relative weak performance is the efficiency of operations, where there is room for improvement.

The CPE found that frequent rotation of project directors is a cause for concern, and a solution needs to be found for better impact. Another issue is the rather wide geographic coverage of the country programme, with numerous relatively small projects dispersed throughout the country in 17 states. Five projects were designed to cover two or three states, which in some cases are not even contiguous. A wide and fragmented programme coverage poses deep challenges to country programme management, for example, in terms of co-ordination, monitoring, supervision, efficiency and sustainability of benefits.

Various innovations have been successfully tested on the ground through IFAD-funded projects and programme, several of which have been replicated and upscaled by the Government and other donors. This is a remarkable achievement. In spite of that, however, the CPE did not discern a systematic or strategic approach by IFAD to replication and upscaling, and the Fund's grants programme has not been used to its potential for promoting pro-poor innovations.

The evaluation found however insufficient attention until the most recent operations to agriculture, which is extremely important given that around 600 million people in the country derive their livelihoods from agriculture-related activities. Selected crop development and research activities were funded through IFAD's grants but had limited linkages with loan-funded projects. The establishment of market-linkages, engagement with the private sector and involvement of panchayati raj institutions has been limited. One recent interesting feature however is the US$20 million funding raised from the Sir Ratan Tata Trust and other private sector operators in the context of the most recent programme in Maharashtra for, inter-alia, bio-fuels development, promotion of organic cotton, and dairy development including milk collection centres. 

Project monitoring and evaluation systems have mainly focused on input-output measurements, and evaluation capacity especially in the agriculture and rural sector focusing on results and impact is generally insufficient. There is a proposal currently under consideration of the Planning Commission to establish an independent evaluation outfit in India, which would be responsible for undertaking rigorous and useful evaluations of development projects and programmes.

The CPE underlines that the convergence of IFAD assistance with government schemes is extremely important, especially at the district level. The absence of convergence has contributed in the past to poor utilisation and results, as there has been duplication of efforts between departments (e.g., in terms of capacity building of communities), overlapping development activities, and multiple reporting requirements. The newest programme in Maharashtra however is a good example of efforts by IFAD to ensure convergence with Government's own initiatives.

Performance of non-lending activities (knowledge management, policy dialogue and partnership building) has been moderately satisfactory. IFAD has made important contributions in few policy areas, but resources and capacities for analytic work and knowledge management have been few. In recent years, there are some interesting knowledge management initiatives, but these have not spanned throughout the period covered by the CPE. As mentioned above, there have been some important achievements in policy dialogue (e.g., institutionalising the self-help groups as an instrument for poverty reduction in national policies and programme, the provision of land titles to tribal people, the wide spread involvement of NGOs in development initiatives), but these have not been systematic and largely confined within project-related processes. Engagement in agriculture and rural development national policy formulation has been limited, partly due to inadequate resources. Partnership with government in general is very good, as it is with civil society and the NGO community, but partnership with the private sector and other multilateral organisations working in agriculture in India has not been vibrant, even though there are signs of improvement in the recent past. Partnership in the central government is particularly strong with the Ministry of Finance, and somewhat limited with other key agriculture and rural development-related ministries, and other central agencies. Even though project execution is the responsibility of state authorities, central government agencies have an important role, not least because they are responsible for formulation of national policies and acts, establishing nation-wide priorities and targets for poverty reduction. They also finance large centrally sponsored schemes for agriculture and rural development.

A number of grants have been provided in support of the country programme, both from IFAD's global/regional and country–specific grant windows. Apart from some global/regional grants (e.g., for ENRAP), the evaluation found little evidence that they have much of an impact on the loan funded activities in the country. Country-specific grants tied within selected projects and programmes more directly support project activities, but their total volume has been very small. This is partly due to the fact that the country-specific window only became available following the approval of the IFAD grants policy in 2003.

The evaluation concurs with the recent move to direct supervision and implementation, even though there are resource issues that need consideration, especially given the size of the ongoing portfolio in the country. Similarly, good efforts have been made to establish a country presence in India since 2001, which is growing and involved in a range of activities related to the country strategy and programme management. There are challenges however in the current arrangements and the impact it can truly have especially in terms of implementation support, partnership building, policy dialogue, knowledge management, and donor co-ordination is limited - given the level of delegation of authority as well as the size and complexity of the country programme. According to the CPE, a strengthened country office in India would not only contribute to achieving better results in the country, but it could also possibly play a wider role in the sub-continent in terms of enhancing efficiency and improving performance in selected countries in the region as well. The evaluation also concludes that overall the hosting arrangements by WFP may no longer be the most attractive option moving forward for IFAD country presence, partly due to the forthcoming cost increases for services rendered by WFP as well as the limited space available. The temporary nature of staff contracts does not provide required job security and incentives for further enhancing performance.

Maybe the most important message from the CPE is that the context has changed significantly in India since the beginning of the IFAD-Government partnership in 1979. The emerging middle income status of India will have important implications for IFAD's role and focus in the country in the coming decade and beyond, even though the Fund's lending terms to the country may not change in the next three year (2010-2012) Performance Based Allocation System cycle. Together with the vast amount of national technical expertise and funds available both through centrally sponsored schemes and state financed initiatives, this will pose a major challenge for IFAD in articulating its objectives and priorities moving forward, also in light of the relatively high transaction costs for the government in nurturing and expanding its partnership with IFAD. All in all, the implications are far-reaching, and after 30 years of co-operation, IFAD and the Government are at a cross-road. They will need to carefully and jointly reflect on the alternative options, directions and approaches to pursue, in order to ensure the continued high relevance of their important partnership for the future. But one thing is clear: the transfer of financial resources will not be the main focus of the partnership in the future.

Recommendations

In light of the above, what role could a relatively small organisation such as IFAD play in India, especially taking into account that in the near future the Fund may no longer be able to lend to the country on highly concessional terms? The CPE offers the below broad recommendations that the Government of India and IFAD agree to adopt and implement within specific timeframes. The recommendations are clustered in two broad categories: strategic and operational issues.

Strategic Issues

Recommendation 1:

Give more priority to smallholder agriculture. Sustainable smallholder agriculture should be included as a thrust area in the new COSOP, as an engine for promoting pro-poor growth and reducing hunger and rural poverty. Among other issues, this would include an emphasis on promoting the viability and risk-management of farming activities by smallholder farmers, with specific attention to rainfed areas with emphasis also on in-situ water conservation, livestock development, and crop production, including staple cereal and pulse productivity.

Deadline: COSOP period 2011-2015
Responsible Entity: IFAD and GOI

Recommendation 2:

Targeting and reduced geographic coverage. In terms of targeting, it is recommended that in future greater emphasis be devoted to smallholder farmers, but also continue to support rural women and tribals. The geographic focus should in principle be narrowed to a smaller group of states, and not expanded beyond the 11 states covered by ongoing operations. Also, two-state projects through one loan and one supervision budget should be avoided in the future. Given IFAD's positive experiences in India and other countries (e.g., the Philippines), opportunities to work in conflict areas could be pursued in consultation with Government. This will however require projects to include in crisis prevention measures (e.g., flexibility in terms of project area coverage), and adequate expertise will need to be mobilised for supervision and implementation support purposes.
Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD and GOI

Recommendation 3:

Enhance private sector engagement in line with corporate social responsibility principles. The partnership with the private sector should be enhanced further, to deliver rural finance and extension services to the rural poor, provide input supply and access to agro-processing infrastructure, facilitate transport of agricultural produce to market points, promote innovations and up-scaling, make information and communication technology more widely available in rural areas, and so on.

Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD and GOI

Recommendation 4:

Innovation with deeper attention to replication and upscaling. The main aim of IFAD-funded projects and programme in India in the future should be to promote pro-poor innovations that can be replicated and upscaled by government, other donors, the private sector, and others. It is therefore recommended that the new COSOP include a well-defined innovations agenda, which would outline the areas that merit to be prioritised. Some examples of the agenda include promoting innovations in micro-finance (e.g., to enable crop insurance, transfer of remittances to the poorest), pro-poor drought and pest resistant agriculture technology, and use of information and telecommunications to link the poor to markets. Moreover, the country strategy should make explicit the approach that will be pursued for replication and upscaling, as this is the ultimate aim of IFAD's capability to promote innovative approaches. Opportunities for developing and strengthening partnerships with national institutions, such as the Indian Council for Agricultural Research, but also the private sector including foundations, for the implementation of this recommendation should be actively explored. Similarly, partnership with NGOs and other rural institutions need to be further expanded in order to scout for, develop, pilot test and assess innovations emerging from the grassroots level

Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD and GOI

Recommendation 5:

Launch a coherent knowledge programme. The new COSOP should include a distinct and clearly resourced knowledge programme. One of the key aims of the programme would be to fill any knowledge gaps on agriculture and rural development and more generally in rural poverty reduction in the country. It could be funded by grants, but also supported by individual operations financed through loans. This programme could contribute to a wider PI initiative together with other IFAD regional divisions to systematically exchange knowledge on rural poverty reduction drawing upon the experiences, lessons learned, and good practices from the Fund's operations in other countries and regions, especially in other middle income countries (e.g., Brazil, China, Argentina and Morocco). The programme could include, inter-alia:, activities to document and share both IFAD's own experience in India, and experiences from IFAD operations in other countries that may be of relevance to the India country programme; and promotion of exchange visits by government officials project staff and members of civil society and NGOs to IFAD-financed projects within and outside India. Another option could be the organisation of thematic workshops in India with prominent guest speakers and other resource persons from other countries with international expertise and reputation in agriculture and rural development issues, focusing on those areas that may be constraining rural poverty reduction in the country at any particular juncture.

Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD and GOI

Recommendation 6:

Seek deeper convergence with government. A very large amount of resources are allocated by the Central and State governments for agriculture and rural development activities. If this funding is to be efficiently used, there must be greater convergence within government-funded programmes, and between operations and other donor-funded activities and Government-assisted programmes. Among other issues, this will require in-depth analysis during project design of other ongoing or planned development initiatives in the districts to be covered by IFAD-supported projects. The aim would be to ensure complementarities in objectives and activities between IFAD-funded and government-financed agriculture and rural development projects and programmes. One way of ensuring convergence is to link project management units more directly with state and district administrations, so convergence can be facilitated during project execution. Further, IFAD-supported projects should build and strengthen the communities' capacity to access the available schemes of different Government's departments. 

Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD and GOI

Recommendation 7:

Widen partnership with central government. The Department of Economic Affairs (DEA) in the Ministry of Finance is the nodal entity responsible for external assistance to India including funding provided by IFAD. In coordination with DEA, IFAD needs to engage more proactively with the central Ministries, especially Ministry of Agriculture and Ministry of Rural Development, to leverage their expertise and experience to focus on some of the important areas that help achieve sustainable livelihoods in the agricultural sector. These agencies also play an important role in national policy formulation and legislation, coordination and monitoring and evaluation, as well as in financing large and important centrally sponsored schemes. Among other issues, a wider partnership with key central Ministries can provide an opportunity for the Fund to contribute towards shaping the design of centrally sponsored schemes and national policies and acts, building on IFAD's own priorities and experiences in the country. Further, IFAD should encourage exposure visits of central government officials to project areas.

Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD and GOI

Recommendation 8:

Ensure ownership and commitment with State Governments.  State Governments need to be involved from the very beginning of project design to ensure that they take full responsibility of the activities and act on the issues that IFAD-supported operations are recurrently facing. In particular, State Government should ensure: (i) smooth flow of funds; ii) timely provision of counterpart funds; (iii) their direct participation in Joint Review Missions; (iv) timely follow-up on agreed recommendations; (v) ensure competitive and attractive salaries and allowances, including their timely adjustments, so as to recruit and retain highly qualified project staff, including NGO staff; and (vi)  and last but not least, continuity of tenure of Project Directors and key-management staff. 

Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD and GOI

Recommendation 9:

Increase loan size. IFAD should consider increasing the average loan size of the operations in the country and undertaking fewer projects in the next COSOP cycle. This would contribute to lowering transaction and administrative costs for both Government and IFAD, while allowing greater attention to implementation support, learning, and impact achievement in general. Such a shift is expected to improve the overall quality of the country programme, and also free up time and resources for greater attention to non-lending activities. Acknowledging the difficulties being occasionally faced in loan disbursements, larger loan size will have implications for targeting and absorptive capacities, and ways will need to be found in future projects to address the corresponding implications. Few examples should be considered: i) greater investments may be made in rural infrastructure including, inter alia, renewable energy technologies, communications and small scale irrigation, which is essential for agriculture and rural development in line with IFAD's targeting policy of 2006; ii) adoption of a saturation approach in targeting of the poorest families at village and block level; and iii) ensuring provision for an adequate project implementation period of around 8 years. Given the size of the programme, the country and the number of rural poor, it is recommended that financing larger projects should not result in a commensurate cut in IFAD's administrative budget allocated towards country programme management.

Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD and GOI

Implementation responsibilities and timeframes. Both IFAD and the Government of India would be responsible for the implementation of the above-mentioned strategic recommendations. They will be appropriately reflected in the new India COSOP, as well as in all the new projects and programmes funded by IFAD following the adoption of the COSOP.

Operational Issues

Recommendation 10:

Strengthen the India country office. There is a need to further strengthen the IFAD country office in India, including the out posting of the country programme manager (CPM) to Delhi and appointment of a full-time coordinator. In general, a strengthened country office is required to enhance project supervision and implementation support, improve policy dialogue, strengthen cooperation and harmonisation with other donors, and further facilitate follow-up on supervision and mid-term review decisions. This would also contribute towards implementation of the CPE recommendations related to the knowledge programme, as discussed above. The role, priorities and organisation of the India country office will need to be reconsidered in developing the new COSOP and implementing the CPE recommendations. This is because the new COSOP is expected to introduce additional priorities and activities, such as a wider focus on smallholder agriculture, a more coherent knowledge programme and systematic engagement in policy dialogue. In this regard, the opportunities, challenges and budgetary implications of out posting the India CPM should be examined in order to bring full decision making and follow-up actions related to IFAD operations closer to the country level. Country office staff should be provided with fixed-term contracts and better mainstreamed into IFAD's overall work force, to provide greater job security and incentives and improve performance. The current hosting arrangements with WFP should be reconsidered, especially in light of the cost escalation in services charged by WFP, and the merits of hiring alternative premises analysed. For example, the possibility of finding premises within the UN complex, World Bank office or other partner institutions would facilitate dialogue and co-operation with other donors. The office infrastructure also needs upgrading, for example, in terms of space and information technology facilities, which are currently constraining the work of the office, inter alia, such as the access to IFAD databases and reports at headquarters. The strengthening of the country office will have important resource implications that would need to be considered to ensure the office's effectiveness and its ability to contribute to the achievement of COSOP objectives.

Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD

Recommendation 11:

Ensure greater continuity in project directors. Rapid turn over of some Project Directors remains a critical issue in IFAD- funded projects and programme, particularly in the early phases of implementation. This is a systemic concern for IFAD and other multi-lateral development organizations in India. While Central Government and State Government shall endeavour to ensure continuity in project directors to the extent possible, IFAD and the Government could consider alternatives including, inter alia, recruiting from the open market or deputing senior level staff form established civil society organizations."

Deadline: COSOP period, 2011-2015
Responsible Entity: GOI

Recommendation 12:

The need to improve project efficiency. There is scope for improving the efficiency of IFAD-funded projects and programmes in the country. Some of the measures recommended above are expected to ensuring better efficiency, such as limiting the coverage of projects to one state, and by ensuring deeper convergence between the IFAD and government programmes. However, there are other measures that should be deployed to improve efficiency, including streamlining the flow of funds to limit implementation delays, strengthen the capacity in the project management unit but also state governments in procurement and other loan administration issues, and ensuring the assignment and continuity of staff to the project with adequate expertise and experience in project management.
Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD and GOI

Recommendation 13:

Resource issues. Among other issues, greater attention in the future to non-lending activities, implementation support, mobilisation of expertise in conflict-resolution, upscaling of innovations, deeper engagement with the central government and the private sector, and the strengthening of the existing country office are likely to have additional recurrent administrative resource implications to IFAD, both in terms of staff time and finances. It is therefore recommended that the management conduct a detailed cost analysis during the formulation of the next COSOP and make the necessary allocations commensurate with the size, focus and coverage of IFAD-supported activities in the country. The additional resources are critical if the CPE recommendations are to be fully implemented, in order to achieve more far-reaching development results on the ground.

Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD

Recommendation 14:

Evaluation capacity development. In close collaboration with the Asia and the Pacific Division, IOE will explore opportunities for supporting the Planning Commission's efforts to establish an independent evaluation outfit in India. Given its mandate and specialisation, IFAD's contribution will be restricted to evaluation capacity development in the agriculture and rural sectors. This will include initiatives to further enhance project-level monitoring and evaluation systems, so that they are also equipped to effectively collect, analyse and report on results and impact in addition to the achievement of physical and financial targets.
Deadline: COSOP period, 2011-2015
Responsible Entity: IFAD

Comments by the IFAD Management and the Government of India

IFAD Management. With reference to Recommendation 10 and the original proposal to establish a sub-regional office, IFAD Management highlights that to date it has no mandate to establish additional country or regional office. This recommendation can only be addressed upon the IFAD Executive Board's decision on the new country presence strategy, scheduled for May 2011.

Government of India. The ACP text was discussed with the Joint Secretary and Director of the Department of Economic Affairs (DEA) of the Ministry of Finance in Delhi on 31 January 2011. DEA proposed a revised text for recommendation 11. This new text was accepted and inserted in the ACP.

Comments by the Office of Evaluation

As per the process for preparing the Agreement at Completion Point, the Office of Evaluation has this opportunity to express its views on any recommendation contained in the India country programme evaluation report that the IFAD management and/or Government of India disagrees with, either fully or partially.

As such, the Office of Evaluation has two comments on: (i) recommendation 10 in paragraph 28 above, related to strengthening of the IFAD country office in India; and (ii) the establishment of an IFAD sub-regional office in New Delhi, recommendation contained in the final India CPE report (see paragraph 33 above containing the IFAD Management comments on this point).

IFAD country office in India.  As agreed by the IFAD management and the Government of India, there is need to further strengthen the IFAD country office in India, including the out posting of the CPM to Delhi.  However, the proposed deadline for the implementation of the recommendation is stated as ‘2011-2015'in this Agreement at Completion Point (see paragraph 28 (b) above).

The Office of Evaluation believes it is important to determine an earlier and specific timeframe for the out posting of the India CPM to Delhi. This is important to ensure the permanent physical presence of the CPM in India, which has received historically the largest amount of IFAD assistance in all regions, both in terms of number of projects and loan amounts provided. The Government of India has also requested for an early out posting of the India CPM to Delhi for quite some time.

The establishment of a sub-regional office in Delhi.   Based on the analysis in the final India CPE report² ,the Office of Evaluation recommends that the IFAD Management explore the opportunities for establishing a sub-regional office in Delhi in the near future. As mentioned in the India CPE report, such a sub-regional office would contribute to improving institutional and project efficiency including the overall quality of results on rural poverty in South Asia region. The Office of Evaluation agrees with the IFAD management comment in paragraph 33 above. That is, the possibility of establishing a sub-regional office in India should be included as an explicit provision within the corporate country presence strategy, to be presented by the Management for approval to the Executive Board in May 2011.

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1/ The India Country Programme Evaluation report was finalised in May 2010 and the Agreement at Completion Point was signed by IFAD and the Government of India on 11 March 2011 and 4 April 2011, respectively.

2/ Which may be downloaded from the relevant page